Managed Services in Europe Forecast to Triple Over Next 5 Years

London, 16 March 2006 – A new report from consultancy BroadGroup forecasts that Managed Services in Europe will triple in value by 2011 to €6.2 billion. Managed services have emerged from a small base to growth currently running at 20% per annum. Highlights from the report will be presented at next week’s Data Centres Europe event (www.datacentres.com/dce)

The report, Managed Services Europe, provides the first assessment of offerings in the sector, and the strategies of new market entrants. The number of new entrants in the managed services space demonstrates a compelling attraction across all segments for longer-term recurring, sustainable rental revenues.

Finding that Enterprises are increasingly receptive to partial third-party management of infrastructure and assets, a range of players have moved into the space but will confront the need to choose between delivery of standardised or customised solutions. In doing so, the importance of collaborative partnerships is emphasised throughout the report, even though this may result in trade-offs.

The report observes that migrating to managed services requires investment as well as acceptance of risk. Competition is intensifying, the cost of sales and channels and pressure to produce standardised products is increasing. In addition, the emergence of “on-demand” IT models is occurring as providers attempt to broaden acceptance of hosted services.

Evidence gathered for the report suggests that Telecom Providers will eventually dominate the hosting market due to their business scale and customer-market presence, taking approximately 32% market share by 2011.

Although all service providers will benefit from the adoption of managed services, Data Centres stand to gain by providing carrier neutral space to the System Integrators and Hosting providers. Data Centre revenue share for direct end user managed services will be relatively small but for those positioned with blade servers the opportunity to acquire further revenues will be high.

“2006 will be a watershed year in the provisioning of Managed Services in Europe,” commented Keith Breed, research director at BroadGroup. “Managed Services across the region should now evolve as a distinct significant growth market, with the UK and German markets forming the nucleus of activity,”